Prediction and Control: The Specific Role of Business Angels in the Investment Process

Kirsten Burkhardt-Bourgeois and Laurence Cohen

Revue de l'Entrepreneuriat, 2022, vol. 21, issue 1, 93-126

Abstract: Entrepreneurs and related investors (business angels and venture capitalists) rely on different types of rationalities. Extant research suggests that conflicts resulting from misunderstanding can emerge between entrepreneurs and investors when they adopt different rationalities but must switch those rationalities because of the maturity of their ventures and the degree of uncertainty they face. Relying on three in-depth case studies, this research contributes to both entrepreneurship and effectuation literature by emphasizing the specific role of business angels in helping entrepreneurs switch rationalities when necessary to attract funding resources from venture capitalists. The research contributes to literature on entrepreneurial finance by analyzing the dynamics between entrepreneurs and different types of investors. It also identifies the role of business angels in helping entrepreneurs switch rationalities to avoid misunderstandings with venture capitalists as an important determinant of co-investment and contributes to literature on entrepreneurship by applying effectuation theory to a new empirical ground.

Keywords: control-oriented/predictive; causation/effectuation; business angels; venture capital; decision-making style; rationalities (search for similar items in EconPapers)
Date: 2022
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